Commercial Real Estate Market Outlook
Total commercial property transaction volume through the first two months of 2013 was $45 billion, up 63% from the same period in 2012 according to Real Capital Analytics. Multifamily sale volume is particularly strong, doubling last years’ results in part due to ongoing availability of attractive financing options in the debt markets.
According to CBRE Econometric Advisors, vacancy rates for most of the major property sectors showed improvement during the first quarter, as follows:
– As of March 31, 2013, the national vacancy rate for multifamily properties was 5.1%, up 10 basis points from the prior quarter and unchanged from the same period last year. The strongest rent growth is being realized in large west coast cities although rent growth on a national level has slowed over the past year. New construction continues to accelerate as completion totals approach historical averages.
Retail – The national retail vacancy level continued its slow improvement in 2013, finishing the quarter at 12.5%, a 30 basis point vacancy reduction from 12.8% last quarter and the largest quarterly drop since 2005. Despite the improvement, vacancy appears to remain at levels which will prevent any meaningful rent increases.
Office – As of March 31, 2013, the national office vacancy level was 15.3%, down 10 basis points from the prior quarter and 70 basis points in the prior year. Smaller markets are showing the most improvement while the large gateway markets remain flat to slightly negative in terms of absorption.
Industrial – The national industrial vacancy level fell 50 basis points in the first quarter, to 12.3% at March 31, 2013. The industrial recovery remains broad based, as about 80% of the 60 largest markets have recorded flat or lower vacancy in comparison to December 31, 2012.